Friday, December 26, 2014

Artists As New Partners in Community Development

My daughter, Lily, described to me how she feels as an artist when urban developers use her as a way to gain attention for their latest city redevelopment scheme (and claim tax credits), but don't ever invite her or other artists to join as equity partners. Lily is concerned that art-makers of various kinds will never be able to improve their lives if all they get is access to specialized space, like performance space, rehearsal space or reduced rents.  Lily lived and worked in Baltimore for a decade, deeply invested in various art scenes, and has been on the periphery of several city efforts (like those in other cities) aimed at triggering redevelopment by encouraging investment in new arts districts.  The city lets developers know that certain abandoned buildings, in strategic locations, are for sale as long as proposals include a mix of affordable housing, commercial activities and art spaces (either subsidized units for artists, rehearsal spaces for arts groups or public performance spaces).  Developers submit bids, hoping that the sale price of the building will be low. They try to put together plans that will yield sufficient returns for them to convince insurance companies, pension funds and banks to invest in what they have in mind. Sometimes the city can add one-time federal state or local grants to help keep costs down. The arts community is rarely invited to be part of the earliest discussions.  For that to happen, individual artists or arts organizations would have to be given access to a great deal of information,  be offered technical assistance and the same level of respect that full fledged partners receive.

Nobody wants to think of themselves as the reason that someone else gets to make a lot of money. What usually happens is that a developer makes a deal with the city, gets the required approvals (while admittedly taking the necessary financial risks), finds the investment capital they need and then announces to the arts community that there will be some opportunities they might appreciate.  When a dance company or a community arts center (future gallery?) wants to design the space being offered, they are usually told that the deal has already been made and that the specs are locked in.  When artists ask whether there are low interest loans available to buy what is otherwise being offered only as rental space, they are told that the deal with the city requires that the housing units or the commercial space not be sold (meaning that they want the continued return to capital). In other words, by the time the arts community is notified it is too late to alter the design of the space and no longer possible for the artists involved to become equity (or sweat equity) partners.

Here's an alternative model. It all begins even before the city government promulgates its Request for Proposals (RFPs).  The city invites individual artists, arts organizations and related arts associations (including foundations) to hear about the city's desire to create one or more arts districts (or to emphasize art-related uses in other commercial and residential buildings). It offers to host a series of workshops for artists who want to understand more about the financial, design and other aspects of community development. Then, the city reframes its usual RFPs to indicate that it will only accept proposals in which development teams include artists or arts organizations as equity partners. The artists don't need to contribute cash upfront to be equity partners. They can earn equity shares by operating and maintaining revenue-generating performance spaces, cafes, restaurants, book stores, galleries, rehearsal spaces and teaching programs. Developers often forget that many artists work second jobs and have professional capabilities in other industries. (And, part of being  successful artist is being a creative problem-solver.) If the city proposes a co-equity model, developers and artists would have substantial incentives to seek each other out.  The city could also appoint an appropriately skilled individual or arts organization to serve as an ombudsman to ensure that any and all deals worked out between developers and artists are as fair as possible.  This same Arts Ombudsman would perform an annual "audit" for the city to ensure that all promises are being fulfilled. No one would need to take (or pay for) legal action to make sure promises are met.  Co-equity housing programs, such as those pioneered in California, have demonstrated that the inflation in property values, when split between property owners and renters, create co-equity opportunities. I'm proposing that the same idea should be applied to arts-oriented city development. If an arts organization co-owns (and, thus, operates) performance and rental space inside a mixed-use development, it should be able to count on receiving a portion of the increased value that it helps to create.

There are examples all over the world of arts-oriented development contributing to the revitalization of struggling central cities. To date, though, the success of such efforts have benefitted real estate developers more than artists. Artists have not been invited to be real partners. It wouldn't be hard for cities to turn this around, ensuring a fairer outcome for arts-makers, without in any way inhibiting the prospects for economic success. Moreover, arts organizations and individual artists are likely to be good investments as well as capable partners with a passionate commitment to their city.

Friday, December 19, 2014

Winning at Win-Win Negotiation

One of my colleagues is quite upset that I have been talking about winning at win-win negotiation.  He views the inclusion of this idea in the subtitle of my new book (Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation, Public Affairs) as a betrayal. He's part of the "Getting to Yes" Club (as am I), and mistakenly thinks that Getting to Yes (Fisher, Ury and Patton) requires a commitment to negotiating in a purely cooperative way.  That's wrong. The "principled approach" to negotiation introduced in Getting to Yes never assumed that both "sides" had to commit to purely cooperative behavior.  Indeed, having known the authors for many years, I can assure you that they expected skilled negotiators to confront the inevitable tension between "creating and claiming value," that is, balancing the cooperative and competitive elements of every negotiation.

The key argument in my book is that a negotiator is likely to do better in a negotiation if he or she goes out of their way to make sure that their counterpart(s) achieve their most important interests -- while they achieve theirs. That doesn't mean, however, that everyone should split everything equally. Indeed, it's not at all clear that an even split is appropriate.  I might bring more to a deal or agree to shoulder a greater share of the risk. If I do that, I should get a disproportionate share of the value we create.  That's only fair. So, the question going into a negotiation is who will get the greater share of the value created AFTER both sides have meet their most important interests.  I call that winning at win-win negotiation.

In the book, I describe six strategies for claiming value in a win-win context.  Each assumes a sincere effort to help the other side meet their most important interests. Indeed, I argue that you should go out of your way to formulate agreements that create more value for the other side than they ever expected.  Once basic interests are met, however, I think you can legitimately argue that since you did more to create a mutually advantageous agreement, you deserve a greater share of the total value created.

Over the last four decades, sophisticated negotiators have moved from win-lose (zero-sum) to win-win (all gain) negotiating strategies.  Now, we have to convince the win-win crowd that there's nothing wrong with claiming a disproportionate share of the value they have helped to create (once basic interests have been met on all sides). There are ways to do this that won't spoil relationships.  Do you know what's involved, or do you need to read Good for You, Great for Me?

Saturday, December 13, 2014

What's the right thing to do when you are really angry about what's happening in America?

Students are marching in the streets to protest the recent killings of Black Americans.  They want those in positions of power to acknowledge that these deaths are, at least in part, the result of unchecked racism that is still very much alive in our country. Whatever progress has been made over the past fifty years to address inequality, unfairness, racial bias, ignorance, lack of empathy and unequal opportunities, there is still a long way to go before everyday life in America aligns with the ideals we espouse as a nation.  The protesters want the institutions that they are part of to do a better job of addressing rampant unfairness and privilege in their normal course of business.  (There isn't a single class being offered in any college or university, for example,  that couldn't make a useful connection between what is being taught and the changes required to make the world a fairer place.)  They want our political leaders to re-affirm that fairness and equality of opportunity are, in fact, important goals.  They want to see explicit action and resource commitments that make it possible to achieve the democratic ideals we allude to all the time.

And, if the leaders in all the institutions and communities in the country no longer think that greater equality of opportunity and fairness in the allocation of collective resources are appropriate goals, then the protesters want them to admit that.  Recent reports indicate that the majority of our citizens no longer think the American dream is something that they or their children can reasonable hope to achieve.  That is, with the jobs they are likely to get, they won't be able to afford the housing and services they require. With the public education available to them (at increasing costs), they won't be able to get better jobs. And, with the cutbacks in government and government services, they won't be able to count on the healthy environment that is a prerequisite to living a full life and providing something better for their children.  If that's what the majority face, the protesters want those in positions of leadership to own up to that. Because once they do, it might be possible to rouse the vast majority of people from their political lethargy.

Even with increasing control of our political process shifting to lobbyists and wealthy donors, the power of social media can not be suppressed.  If the vast majority of people reach the conclusion that the inequalities and unfairness in our society are no longer tolerable, and they had an easy way to express their unhappiness, the noise would be deafening.  If that noise were accompanied by an on-line mobilization effort around a very simple agenda, it would be possible to reframe the political discourse in the country and draw in the half of all eligible voters who don't bother to vote.  It now takes only 20% of eligible voters to win a Congressional seat. It doesn't take much more than that to win the Presidency. If everyone eligible could vote on line, and their votes were clearly connected to an explicit action agenda (rather than a watered-down party platform), it would be relatively easy to engage the half of America that is too disheartened or angry to vote.

What might this new political agenda include?  Not easy bromides or slogans about divisive social issues that have no consequence for how trillions of public dollars are spent. Rather, the agenda should include free public education through college for anyone whose family makes less than $100,000 a year.  Free job training for anyone who chooses not to attend college. Free health care for anyone who needs it, but can't afford it.  Free food for any family that can't afford it. Housing subsidies for anyone who can not afford market-reate housing. A retirement wage sufficient to live a meaningful life. The programs needed to accomplish all of these goals are already in place (although there are elected politicians trying to dismantle them). They are just not funded adequately. We have the financial resources in our overall economic system to cover these costs while still allowing continued economic growth.   At the heart of everything is what we have forgotten about the role of government.  It is only through our collective efforts that our individual well-being can be guaranteed, and government is the only mechanism by which we can act collectively.  There is no way that each household can ensure clean water, clean air, adequate transportation, food that's safe to eat, punishment of consumer fraud, access to information, a legal system that holds private parties to their contractual obligations, protection from terrorism, investment in basic science, and so on.  Yet, as a country, we have been brainwashed. We think that shrinking the government is going to help us. Nothing we do privately will amount to anything without an adequate government system to protect us.  Each of us is both a private actor and a citizen.  People have been focused too much on the things they can do for themselves as private individuals, and not enough on the things we must all do together for our private interests to amount to anything.

Take the total cost of all the guarantees I have listed. Subtract the revenue raised by a reasonable tax on corporate wealth and profits. Divide the remainder by the number of households in America. Compare the remaining cost per household to the income and wealth that each household has. Calculate what a progressive system of taxation would need to raise to cover these basic guarantees. Design a system of taxation that rewards entrepreneurial effort, but only after our minimum collective  costs are covered.

What we need are some very bright people to prepare a national budget starting with a clean sheet of paper.  I think most people would be shocked to see how easily all the basic guarantees I have listed can be met. If people ran for office on a very specific agenda of expenditure and revenue priorities, we could hold our elected officials accountable (at every level of government) to fulfill these commitments (and nothing more). This would restore everyone's sense of political efficacy.  My colleague Sol Erdman and I have spelled out how this would work (what we called Interactive Representation or IR) in a book entitled THE CURE FOR OUR BROKEN POLITICAL PROCESS: How We Can Get Our Politicians to Resolve the Issues Tearing Our Country Apart (Potomac Books, $10 Kindle or Hardback). But, even if you don't look at the book, think about what it will take to ensure greater equality of opportunity and fairness of results in America. Think about the things we have to do collectively because individuals working on their own can't accomplish them. Think about using social media to mobilize people around a very simple agenda. Think about the things you can propose that would benefit the vast majority of Americans and ensure greater fairness in our society. Try to get the place where you work or study to put aside a little time to talk about the systematic racism and unfairness that people in our country face every day.